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2021 (5) TMI 445 - AT - Income TaxRevision u/s 263 - Deduction u/s 80IB(10) - as per PCIT housing project in respect of which the assessee firm has claimed deduction u/s 80IB(10) was approved on 03.02.2009, whereas section 80IB(10) allows deduction of profits from such housing project which has to be approved before the 31st day of March 2008 by a local authority, therefore, the claim of deduction u/s 80IB(10) allowed by assessing officer was not found to be correct - HELD THAT - From the order under section 143(3) of the Act, it is clear that during the original assessment proceedings, the issue relating to deduction under section 80-IB (10) has been discussed and adjudicated by the assessing officer, therefore, after expiry of two years, ld. PCIT should not have exercised his jurisdiction on the issue which has already been discussed and adjudicated in the original assessment proceedings. Thus, ld PCIT has violated the provisions of sub-section 2 of section 263 of the Act. We also note that the said issue, relating to deduction under section 80-IB (10), has already been adjudicated in favour of assessee in AY 2009-10 vide assessment order passed under section 143(3) of the Act dated 27.09.2011 for A.Y. 2009-10, wherein the issue has been discussed in assessment order. PCIT did not revise the order of assessing officer under section 263 of the Act for the assessment year 2009-10. Based on the principle of consistency the claim of the assessee is genuine. The Principle of consistency applies to an order under section 263 of the Act as well, as held in the case of H.P. Cotton Textile Mills Ltd, . 2007 (8) TMI 321 - PUNJAB AND HARYANA HIGH COURT Assessing Officer has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the revenue as held by Hon ble Supreme Court in Malabar Industries Ltd. vs. CIT 2000 (2) TMI 10 - SUPREME COURT . - Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed under section 263 by the Principal Commissioner of Income Tax (PCIT). 2. Legitimacy of the deduction claimed under section 80IB(10) of the Income Tax Act, 1961. 3. Timeliness and jurisdiction of the PCIT's order under section 263. 4. The doctrine of merger and its applicability. 5. Consistency in the application of tax laws across assessment years. Detailed Analysis: 1. Validity of the Order Passed Under Section 263 by the PCIT: The assessee challenged the order passed by the PCIT under section 263, arguing that the original assessment order under section 143(3) was neither erroneous nor prejudicial to the interest of the revenue. The PCIT had invoked Explanation 2 of Section 263, asserting that the assessment order was erroneous and prejudicial to the revenue's interest because the housing project was approved after the deadline stipulated in section 80IB(10). 2. Legitimacy of the Deduction Claimed Under Section 80IB(10): The assessee claimed a deduction of ?2,80,64,646 under section 80IB(10) for a housing project. The PCIT contended that the project was approved on 03.02.2009, while the section required approval before 31.03.2008. The assessee argued that the project was initially approved on 30.03.2007 and the subsequent approval in 2009 was merely a revision. The Assessing Officer (AO) had already examined and allowed the deduction in the original assessment order. 3. Timeliness and Jurisdiction of the PCIT's Order Under Section 263: The original assessment order was passed on 26.03.2013, and the PCIT issued the order under section 263 on 03.03.2020. The tribunal noted that under section 263(2), no order can be made after two years from the end of the financial year in which the order sought to be revised was passed. Therefore, the PCIT's order was time-barred and lacked jurisdiction. 4. The Doctrine of Merger and Its Applicability: The assessee argued that the doctrine of merger applied because the issue of deduction under section 80IB(10) had already been adjudicated by the CIT(A) and the Tribunal in previous years. The tribunal agreed, stating that once the CIT(A) had allowed the deduction, the original assessment order merged with the appellate order, and the PCIT could not revise it under section 263. 5. Consistency in the Application of Tax Laws Across Assessment Years: The tribunal emphasized the principle of consistency, noting that the deduction under section 80IB(10) had been allowed in the previous assessment year (2009-10) for the same project. The PCIT did not revise the order for that year, indicating acceptance of the deduction. The tribunal cited the case of H.P. Cotton Textile Mills Ltd. to support the principle of consistency. Conclusion: The tribunal quashed the PCIT's order under section 263, stating that it was time-barred and lacked jurisdiction. The original assessment order was neither erroneous nor prejudicial to the interest of the revenue, as the AO had already examined and adjudicated the issue of the deduction under section 80IB(10). The tribunal also upheld the principle of consistency, noting that the deduction had been allowed in the previous year for the same project. The appeal of the assessee was allowed.
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